The technology sector lifted Asian stocks on Thursday, while the dollar dipped and oil stabilised as prevailing concerns about high inflation and the risk of recession eased a little.
MSCI Inc.’s Asia-Pacific share index added more than 1%, aided by a rally in chipmakers after a positive reception for Samsung Electronics Co.’s results. US and European futures were in the green too.
Oil snapped a slide that’s become emblematic of economic growth worries, but remained below $100 a barrel. The Bloomberg dollar gauge edged down as commodity currencies like Australia’s pushed higher and the euro found some respite.
Samsung reported a better-than-anticipated revenue jump, assuaging fears about weakening consumer demand and soaring material costs. Investors earlier had been focused on the Federal Reserve’s determination to tackle inflation even at the expense of slower economic activity.
The minutes of the Fed’s June meeting flagged the possibility of “even more restrictive” monetary policy to prevent entrenched inflation. That triggered a slide in Treasuries on Wednesday led by shorter maturities, but they pared some of that move in Asian trading.
The latest market gyrations extend a period of volatility across assets as investors grapple with threats from elevated price pressures and a parlous economic outlook amid tightening monetary settings in much of the world.
Over the last couple of weeks “all asset classes have been giving us a unified message, which is slower growth is coming ahead,” Mona Mahajan, senior investment strategist at Edward Jones & Co., said on Bloomberg Television.
Markets see another 75 basis point Fed hike in July. The peak of the tightening cycle in early 2023 is now seen at about 3.4% from around 3.2% earlier. Parts of the US yield curve have inverted, suggesting that traders see the higher rates sparking a recession and a reversal by the Fed later next year.
In China, Shanghai reported the most virus infections since late May, fueling concern it may find itself back in lockdown in pursuit of Covid Zero. That helped fuel a decline in Chinese tech stocks, where investors also took profit after a recent rally.
The pound pared losses sparked by the continuing political drama in the UK. Boris Johnson told Cabinet colleagues he will not resign as Conservative leader and prime minister, despite a slew of ministers quitting and some of his closest allies demanding he go.
What to watch this week:
- EIA crude oil inventory report, Thursday
- Fed Governor Christopher Waller, St. Louis Fed President James Bullard, scheduled to speak, Thursday
- ECB account of its June policy meeting, Thursday
- US employment report for June, Friday
Some of the main moves in markets:
- S&P 500 futures rose 0.3% as of 6:34 a.m. in London. The S&P 500 rose 0.4%
- Nasdaq 100 futures climbed 0.4%. The Nasdaq 100 rose 0.6%
- Japan’s Topix index rose 1.2%
- South Korea’s Kospi rose 2.1%
- Australia’s S&P/ASX 200 index added 0.6%
- China’s Shanghai Composite index climbed 0.5%
- Hong Kong’s Hang Seng index was steady
- Euro Stoxx 50 futures increased 1.1%
- The Bloomberg Dollar Spot Index fell 0.3%
- The euro was at $1.0205, up 0.2%
- The Japanese yen was at 135.71 per dollar, up 0.2%
- The offshore yuan was at 6.7010 per dollar, up 0.2%
- The yield on 10-year Treasuries fell one basis points to 2.92%
- West Texas Intermediate crude was at $98.97 a barrel, up 0.5%
- Gold was at $1 747.12 an ounce, up 0.5%.